$6.6M in rail loans OK’dIt’s less than requested, but will ‘further the cause of South Dakota agriculture.’
By: Chris Mueller, The Daily Republic
PIERRE — Facing tough financial decisions, the state Railroad Board approved only about $6.6 million of the $15 million in loan applications from five applicants considered at the board’s meeting Wednesday.
With only about $6.9 million becoming available into the state railroad trust fund by the end of the 2013 fiscal year, the Railroad Board could not approve the full amount of the loans requested by its five applicants: Liberty Grain, Dakota Mill and Grain, Deadwood BioFuels, Prairie Ag Partners and Ochsner Real Estate Limited Partnerships.
The board approved all of Wednesday’s loans with the contingency they each go through a regional railroad authority, which has the power to assess property taxes if a loan goes unpaid. Liberty Grain applied for a $3.6 million state loan, but requested Wednesday that application be tabled indefinitely while it decides whether to proceed with the Mitchell-Rapid City Regional Railroad Authority or move to another regional railroad authority. Liberty Grain is currently constructing a $33.6 million grain-loading facility east of Kimball. The facility is expected to open in October.
“I understand it’s going to put us at the back of the line,” said Liberty Grain representative Toby Morris. “It’s the right thing to do at this time.”
Morris said Liberty Grain would consider state loans in the future once it decides on a regional railroad authority.
The board approved loans for the other four applicants at approximately 60 percent of the amounts requested.
Dakota Mill and Grain was approved to receive a state loan of $2.4 million for a $22.8 million grain-loading facility it plans to build one mile west of Kimball. It had initially applied for a $3.5 million state loan.
Dakota Mill and Grain Vice President of Marketing Jerry Cope said the facility would have a $4 million impact on the community.
“It goes a long way to furthering the cause of South Dakota agriculture,” Cope told rail board members.
The rail board approved another $2.4 million loan for Prairie Ag Partners, of Lake Preston, for an 8,000-foot rail loop to handle 120-car trains at its Lake Preston facility.
Ochsner Real Estate was approved to receive $1.44 million in state funds for a new 1.5 million bushel grain-storage facility near Aberdeen that requires 10,620 feet of new rail.
The final loan approved by the state rail board Wednesday went to Deadwood BioFuels.
The board approved a $375,600 loan for the Rapid City-based wood pellet producer for a new siding that will allow the company to ship wood pellets in bulk via rail cars.
All loans were approved with a 2 percent interest rate with a pay-back period of 15 years with a balloon after 7 years. Applicants were told they could reapply to request additional funding as more money becomes available.
Other business handled Wednesday by the state rail board included discussion regarding the state’s application for an $18.5 million federal Tiger IV grant, which would provide funding to extend the rehab of the state-owned Mitchell to Rapid City rail line west of Chamberlain to Presho.
Work on the $29 million rehabilitation of the line east of Chamberlain is scheduled to resume next week.